QUESTION $1$

Charleston Asset Advisors' portfolio returned $16\mathrm{.}2\%$ this past year. The portfolio consisted of a basket of equities, generally in the Tech sector and had a Beta of $1\mathrm{.}42.$ The comparative benchmark for this portfolio was the S&P $500$ Index which returned $13\mathrm{.}8\%$ while US Treasury investments returned $2\mathrm{.}8\%.$

Given this scenarios, please calculate the Jensen's Alpha for this portfoio.

$-0\mathrm{.}47\%$

$+14\mathrm{.}6\%$

$-2\mathrm{.}6\%$

$+2\mathrm{.}1\%$

$+13\mathrm{.}4\%$

$10$ points

QUESTION $2$

Looking at the Dupont Analysis below of $3$ competitor firms, which of the $3$ firms has the best Operating Metrics? Which firm is doing the best job managing their day to day business?

Company ROE PM TAT EM

Tandom, Inc $29\mathrm{.}2\%19\mathrm{.}1\%0\mathrm{.}851\mathrm{.}8$

Hybrid, Corp $28\mathrm{.}6\%20\mathrm{.}1\%0\mathrm{.}951\mathrm{.}5$

Gemco, Co$.38\mathrm{.}5\%19\mathrm{.}2\%0\mathrm{.}593\mathrm{.}4$

Hybrid

Tandom

Gemco

$10$ points

QUESTION $3$

An investor is in the process of deciding what percent of their investment is allocated to stocks and bonds. What type of investment decision is this investor making?

Security Selection

Industry Selection

Economic Analysis

Asset Allocation

$10$ points

QUESTION $4$

A few weeks ago, you short sold $100$ shares of Gemini Inc. at $$60$ per share. Today, the price of the stock is $$71$ per share.

Given this scenario:

What is your Total dollar gain$/$loss on the shorted shares as of "Today"?

Total Dollar Gain$/$Loss: GAIN $$1,000$

Total Dollar Gain$/$Loss: GAIN $ $7,100$

Total Dollar Gain$/$Loss: LOSS $$1,000$

Total Dollar Gain$/$Loss: GAIN $ $1,100$

Total Dollar Gain$/$Loss: LOSS $ $1,100$

$10$ points

QUESTION $5$

A key contribution of Modern Portfolio Theory $($MPT$)$ is that you can combine two portfolios together to form a superior set of allocations that are extremely risk efficient.

What are these two portfolios?

You would combine two risky assets that have the two highest sharpe ratios

You would combine a risk free asset with the most efficient risky portfolio $($with the highest sharpe ratio$)$

You would combine the minimum variance portfolio and the market portfolio

You would combine a risk free asset with the portfolio with the least risk $($minimum variance portfolio$)$

$10$ points

QUESTION $6$

According to the efficient markets hypothesis $($EMH$),$ if unexpected good news is announced related to Nike during the middle of the day, what typically happens to the share price of the stock? Choose the Best Answer

It gradually moves higher throughout the day.

It moves lower immediately, but then slowly rises throughout the day

It moves higher immediately and continues more gradually throughout the day

It moves sideways as unexpected news doesn't immediately imact stock prices

$10$ points

QUESTION $7$

What is the weighted average return of the portfolio below?

Company Amount Owned Return

Home Depot $$45,0008\mathrm{.}4\%$

Lowes $$25,00022\mathrm{.}5\%$

Blank Spreadsheet.xlsx

$21\mathrm{.}6\%$

$15\mathrm{.}5\%$

$15\mathrm{.}9\%$

$13\mathrm{.}4\%$

$12\mathrm{.}7\%$

$10$ points

QUESTION $8$

Juniper Stock Investments had a $3-$year average annual return of $18\mathrm{.}4\%$ while Risk$-$Free, Short$-$Term US Treasuries returned $1\mathrm{.}20\%.$ If Juniper's portfolio had a standard deviation of return of $18\%,$ then what is the Sharpe ratio of their portfolio?

$1\mathrm{.}022$

$0\mathrm{.}956$

$1\mathrm{.}804$

$1\mathrm{.}318$

$10$ points

QUESTION $9$

The current market for Botch Watchmaker's equity shares is below. It displays bid, ask prices and quote depth $($shares$).$

Given this information, what would happen if you placed a limit sell order for $800$ shares at $$12\mathrm{.}67$ per share?

BID $($SHARES$)|$ ASK $($SHARES$)$

$$12\mathrm{.}50(1,300)|$ $$12\mathrm{.}65(2,000)$

$$12\mathrm{.}48(1,250)|$ $$12\mathrm{.}71(300)$

You would sell $800$ shares at $$12\mathrm{.}67$ immediately

You would not execute and the order would become the best bid price in the market

You would sell $800$ shares at $$12\mathrm{.}67,$ the best bid price

No shares would be traded and your order would become the second best Ask order in the market

$10$ points

QUESTION $10$

EXTRA CREDIT $/$ BONUS QUESTION

Boat Question

Based on what we have discussed in class, in your notes and on your homeworks $-$ what do I say this picture signifies in terms of the economy?

The economy is backed by commerce and transportation of goods rather than services.

Much of the US economic output is generated by trading from port to port on vessels like the one pictured here.

The economy takes time to change course, but you can see the direction it is turning and anticipate where it's headed

Shipp